In FY’25, we expect Stanbic IBTC Holdings Plc (NGX: STANBIC) to grow earnings by a milder 43.9% YoY compared to the strong momentum seen in Q1’25, where Profit After Tax (PAT) rose by 79.8% YoY to N82.1 billion, despite a moderation in non-interest revenue (NIR) and a higher effective tax rate. The standout driver of the Q1 performance was Net Interest Income (NII), which surged by 94.9% YoY to N149.9 billion. The NII growth was supported by the 55.8% YoY surge in interest income to N180.5 billion and the 21.4% YoY decline in interest expense to N30.6 billion, which cascaded to a 6.0ppts YoY uptick in Net Interest Margin (NIM) to 16.0%.
Our relatively conservative view on earnings growth is driven by adjustments for possible pressure points capable of tapering bottom line momentum. Notably, we expect loan provisioning in subsequent quarters (vs the write back in Q1’25) as the business continues to expand its assets amid the current macro economic environment. In addition, STANBIC's effective tax rate is expected to rise to 30.0% in FY'25 (vs 25.8% in FY'24), given the transition to a corporate income tax basis from a minimum tax basis in the banking subsidiary. Thus, while underlying fundamentals remain solid, the effects of both factors are likely to slow the pace of earnings growth in FY'25 compared to the traction in FY’24.
